January 17, 2007

A property rights fix for tropical defortestation?

Tropical rainforests provide a number of environmental and economic benefits yet they are rapidly disappearing. From NASA's Earth Observatory:

The clearing of tropical forests across the Earth has been occurring on a large scale basis for many centuries. This process, known as deforestation, involves the cutting down, burning, and damaging of forests. The loss of tropical rain forest is more profound than merely destruction of beautiful areas. If the current rate of deforestation continues, the world's rain forests will vanish within 100 years-causing unknown effects on global climate and eliminating the majority of plant and animal species on the planet.

There are two primary causes of deforestation. First, countries with tropical rainforests are relatively poor and extraction from the forests is a good way to earn income (short term). The second primary cause is the absence of property rights. No one has an incentive to manage the forest sustainably (maximize profits over time) so that everyone has an incentive to cut down trees before their competitor does so. The end result is the well-known tragedy of the commons.

A Brazilian government plan set to go into effect this year will bring large-scale logging deep into the heart of the Amazon rain forest for the first time, in a calculated gamble that new monitoring efforts can offset any danger of increased devastation.

The government of President Luiz Inácio Lula da Silva, in an attempt to create Brazil’s first coherent, effective forest policy, is to begin auctioning off timber rights to large tracts of the rain forest. The winning bidders will not have title to the land or the right to exploit resources other than timber, and the government says they will be closely monitored and will pay a royalty on their activities.

The architects of the plan say it will also help reduce tensions over land ownership in the Amazon, the world’s largest tropical forest, which loses an area the size of New Jersey every year to clear-cutting and timbering.

In theory, 70 percent of the jungle is public land, but miners, ranchers and especially loggers have felt free to establish themselves in unpoliced areas, strip the land of valuable resources and then move on, mostly in the so-called arc of destruction on the eastern and southern fringes of the jungle.

But the called-for monitoring of the loggers allowed into the rain forest’s largely untouched center will come from a new, untested Forest Service with only 150 employees and from state and municipal governments. That concerns environmental and civic groups because local officials are more vulnerable to the pressures of powerful economic interests and to corruption.

Lots of good policies are doomed because of the lack of monitoring and enforcement. This one seems likely to fall into that category.

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A property rights fix for tropical defortestation?

Tropical rainforests provide a number of environmental and economic benefits yet they are rapidly disappearing. From NASA's Earth Observatory:

The clearing of tropical forests across the Earth has been occurring on a large scale basis for many centuries. This process, known as deforestation, involves the cutting down, burning, and damaging of forests. The loss of tropical rain forest is more profound than merely destruction of beautiful areas. If the current rate of deforestation continues, the world's rain forests will vanish within 100 years-causing unknown effects on global climate and eliminating the majority of plant and animal species on the planet.

There are two primary causes of deforestation. First, countries with tropical rainforests are relatively poor and extraction from the forests is a good way to earn income (short term). The second primary cause is the absence of property rights. No one has an incentive to manage the forest sustainably (maximize profits over time) so that everyone has an incentive to cut down trees before their competitor does so. The end result is the well-known tragedy of the commons.

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